228 SŁAWOMIR ZAWISZA,ANNALS PIOTR OF PRUS,THE POADRIANLISH SADŁOWSKI ASSOCIATION OF AGRICULTURAL AND AGRIBUSINESS ECONOMISTS received: 18.03.2020 Annals PAAAE • 2020 • Vol. XXII • No. (2) acceptance: 15.04.2020 published: 25.06.2020 JEL codes: Q10, Q13, Q16, Q18 DOI: 10.5604/01.3001.0014.1100 SŁAWOMIR ZAWISZA, PIOTR PRUS, ADRIAN SADŁOWSKI UTP University of Science and Technology in Bydgoszcz, Poland EVALUATION OF DIRECT PAYMENT IMPORTANCE ON CROP PRODUCTION FROM EUROPEAN UNION FUNDS – AN EXAMPLE OF THE BARCIN COMMUNE Key words: direct payments, agriculture, direct payments allocation, farmer expectations, Poland, Barcin commune ABSTRACT. Poland became a member of the European Union upon the Accession Treaty of 1 May 2004. As a result, the objective was to include domestic agricultural producers in the direct payment scheme and other rural development and agricultural support instruments functioning in successive fi- nancial frameworks executed as part of the Common Agricultural Policy (CAP) of the European Union. The aim of the present study has been to evaluate the importance of direct payments on crop production from EU funds in the opinion of farmers of the Barcin commune (the Kujawsko-Pomorskie Province). The level of satisfaction with the crop production payments received, what the funds from the payments are used for and the expectations of the farmers in terms of the payments were investigated. The study involved the use of the survey method, a survey questionnaire carried out in 2014, which included 100 farmers. Results have shown that direct payments were appreciated by farmers who allocated the funds to meet current needs and investment purposes. The payments have enhanced the respondents’ produce quality and provided additional technical equipment on the farm. An increase in agricultural income due to European Union funds has encouraged farmers to remain in the farming profession in the future. INTRODUCTION Poland became a member of the European Union upon the Treaty of Accession of 1 May 2004. Membership was preceded by a process of harmonizing the country with EU requirements and standards and pre-succession programmes supporting preparations. For Poland, the sixth biggest food producer in the European Union, and with a value of food sold accounting for 6% of GDP, agribusiness is of special importance [Sikora, Bielski 2017]. With that in mind, one of the key areas of changes were rural areas, especially agriculture [M. Roman, M. Roman 2018, Bogusz, Tomaszewski 2015]. Polish farmers have been covered by the direct payment programme and agricultural development support instruments which operated in successive financial frameworks as part of the EU CAP. The first stage of financing rural areas and agriculture in Poland was the 2004-2006 National Development Plan, which included the Sectoral Operational Programme and the Rural Development Programme. Successive financial assistance for rural areas and agriculture, EVALUATION OF DIRECT PAYMENT IMPORTANCE ON CROP PRODUCTION FROM... 229 programmed as part of the 2007-2013 Rural Development Programme, was addressed to farmers, entrepreneurs, local authorities and forest owners. It was related to building competitive agri-food and forestry sectors. In the 2014-2020 financial framework, Poland received about 12% more EU funds than in 2007-2013 for agriculture and rural develop- ment, thanks to which successive development-enhancing triggers in that economic sec- tor emerged. Interestingly, CAP direct payments are allocated while considering various payment calculation models. As reported by e.g. Joanna Nowakowska-Grunt and Barbara Kiełbasa [2016], in successive financial frameworks, changes in direct support systems, adjusting the form and amount of support to changing agricultural production conditions in Europe, including economic conditions found in respective EU member states, are required. In the paper, thorough analysis covered the aspects of importance of direct pay- ments (reported by e.g. Wawrzyniec Czubak [2008] and Wawrzyniec Czubak and Paulina Jędrzejak [2011]), as a crucial form of support to farmers. Payments compensate for an increase in production costs and affect farm modernization [Śmiglak-Krajewska 2018]. MATERIAL AND RESEARCH METHOD The aim of the research was to evaluate the importance of direct payments on crop production from EU funds in the Barcin commune. It covers a study of opinions of farm- ers of the Barcin commune on the operation of direct payments. The study covered the level of satisfaction with payments on crop production, the use of payment funds and the expectations of farmers in terms of payments. The study involved the survey method using the survey questionnaire technique. For that purpose, a survey questionnaire was developed to be completed by 100 farmers of the villages of the Barcin commune, Kujawsko-Pomorskie Province. The study was per- formed in March 2014, 10 years after Poland joined the EU. The study, with the survey questionnaire, was carried out among farmers of Mamlicz, Kania, Złotowa, Barcin Wieś, Młodocin and Józefinka, villages with a well developing agriculture once Poland joined the EU. The random selection of respondents was applied in the research. The farmer group was dominated by men (98%), while women accounted for 2% of respondents. Only 2% of respondents were 29 years of age, 48% – persons 30-39, 44% were aged between 40-49, and only 6% were 50-59. The study was, thus, dominated by the opinions of persons aged 30 and 49. The farmers’ educational background was as fol- lows: 12% – primary education, 68% – vocational education, while 20% of respondents declared having a secondary education background. No higher-education-background respondents were recorded. Of all the respondents, 35% farmed land 1.99-9.99 ha in size, 45% – from 10.00 to 19.99 ha and 20% managed farms bigger than 20.00 ha. 230 SŁAWOMIR ZAWISZA, PIOTR PRUS, ADRIAN SADŁOWSKI RESEARCH RESULTS AND DISCUSSION Changes in support allocation principles as part of single area payments have made the mechanism very complex. On the one hand, the so-called system for small farms which automatically covered entities with direct payments not exceeding 1250 euro were proposed. On the other hand, a further extension was noted for the mechanisms of support of direct payments for other entities (single area payment, additional payment, production-related support, payments for young farmers, green direct (greening) pay- ments, decoupled payments, etc.) [Wojewodzic 2017]. All that frequently makes farmers use specialist consulting services [Czubak, Sadowski 2011]. Differentiation in instruments dedicated to larger agricultural farms was devised to support the income of agricultural families and, additionally, introduce payments for young farmers related to farm area to enhance the motivation of potential agricultural activity successors [Wojewodzic 2017, Śmiglak-Krajewska 2019]. Investigating the opinions of farmers on the improvement of the quality of life in rural areas in the Barcin commune, it has been found that 78% of respondents noted an improve- ment, 22% did not make any such comment, nobody was negative about it (Figure 1). Interestingly, studies determining the level and quality of life of residents of Polish rural 40% 38% Figure 1. Opinions of farmers on 40% 38% 22% the enhancement of the quality 22% of life in rural areas in the Barcin commune Yes Rather yes II havehave nono opinionopinion Source: own study Yes Rather yes I have no opinion 50% 50% 30% Figure 2. Level of satisfaction 30% 20% 20% with payments to crop production in the opinion of farmers residing in the Barcin commune Very high Quite high Average Very high Quite high Average Source: own study 46% Figure 3. Effect of direct payments 46% on the financial condition of the 22% 20% farm upon Poland joining the EU 22% 20% 12% 12% in the opinion of farmers residing in the Barcin commune Very high Quite high Average Quite low Source: own study Very high Quite high Average Quite low 54% 54% 16% 16% 10% 10% 10% 2% 10% 2% Purchase of Pesticides Seed Purchase of animals Purchase of Purchase of Pesticides Seed Purchase of animals Purchase of fertilisersfertilisers machinery fertilisers machinery 90% 90% 10% 10% Yes No Yes No EVALUATION OF DIRECT PAYMENT IMPORTANCE ON CROP PRODUCTION FROM... 231 areas, performed40% by Sławomir38% Kalinowski [2015], show that neither a subjective evalu- ation nor objective indicators confirm such22% optimistic opinions. Neither do other reports by this author [Kalinowski, Kiełbasa 2017] on EU rural40% areas confirm38% such optimism. AnalysingYes the levelRather of satisfaction yes I have with no opinioncrop production payments received, 50% of22% respondents considered it quite high, 30% – very high, while 20% – considered it average. None of the respondents selected responses characteristic for a low or very low level of Yes Rather yes I have no opinion satisfaction again (Figure 2). The effect of direct payments on the financial condition of agricultural farms upon Poland joining the EU in the opinion of farmers residing in the Barcin commune was as 50% follows: 46% of respondents observed a very high effect, 22% – quite a high effect, 20% 30% – an average effect, 12.0% – quite a low effect.20% Nobody selected the “very low” response (Figure 3). As reported by Paweł Dziekański [2016], the financial condition50% is the basic factor for evaluating the operation of economic entities.30% Its analysis is necessary not only Very high Quite high Average 20% for ongoing management but also for protection against the side effects of any potential economic slow-down. It is a development determinant and affects all actions taken in the economic environment. Very high Quite high Average Direct payments on crop production among farmers were mostly allocated to the pur- chase of fertilizers – 54% of respondents, 16% of respondents purchased pesticides, while 10% - financed seeds, 10% invested in the purchase of machinery, 2% – in the purchase 46% of animals (Figure 4), and 8% of farmers participating in the survey did not provide any 22% 20% answer to the question.